A Swiss friend once told me an old joke that goes like this: Heaven is where the Swiss run the railroads, the English are the police, the French make the food, the Italians are the lovers and the Germans make the cars. In hell, the Swiss are the lovers, the English make the food, the French make the cars, the Italians run the railroads and the Germans are the police.

In this topsy-turvy jewelry world of 2004, a similar gag might work. If someone had predicted 10 years ago that in 2004 De Beers would be working to shed its status as a monopolist, you would have laughed. If youd heard Indian diamantaires would be making high-quality jewelry, you would have guffawed. The chuckles may have dissolved if youd been told you would lose significant diamond sales to Internet sellers or be unable to get certain loose diamonds because of shortages. Yet these are the very scenarios you grapple with today.

De Beers decision to give up its role as Big Daddy occurred for a complex list of reasons. But when it stopped paternalistically controlling and regulating the diamond supply, it contributed to a new volatility in the marketplace. Thats one reason for current diamond shortages. So is De Beers pressure on its sightholder clients to make more noise in the consumer marketplace. Consumer demand is growing wildly as a result  but there arent enough new diamonds to meet the demand.

De Beers now champions the branding of diamonds because, for one reason, it correctly observed they were becoming commoditized on the Internet. Thats exactly why consumers can buy generic diamonds now at rock-bottom prices and avoid the typical markup at their local jeweler.

Enter the Indians, who also are affected by these changes but are uniquely positioned to take advantage of them. India began adding value to its diamonds by setting them in jewelry years before De Beers asked its clients to do so. It was rewarded for this prophetic move by receiving a record number of sights when De Beers shook up its list of clients last year.

The Indian jewelrymaking community used its head start to acquire the most sophisticated jewelrymaking equipment in the world, plus India has a well-educated and lower-wage work force. Finally, despite their long history as jewelry makers, the Indians were humble enough to understand they needed to learn more from the international community about contemporary jewelry design. As a result, today they make jewelry thats beautiful and affordable, according to jewelers who stock it. See our article on page 21 for details.
Whats to learn from all this change? If youve visited London and sampled its sublime restaurants or watched German auto reliability ratings tumble in the past few years, you know stereotypes dont last forever. The Brits can cook and German cars arent always rock solid.

Similarly, if youve dismissed Indian-made jewelry as being unimaginative or low quality, maybe its time to take another look. Maybe its also time to look beyond loose diamond sales and begin selling store-branded diamond jewelry. The Indians can help you  just ask the jewelers who now rely on them. Not all change is bad. You just have to know how to manage it to your advantage.